Chartered Institute of Building Magazine of the Chartered Institute of Building


Financial watchdog issues warnings to Carillion and directors

16 November 2020

The financial watchdog is proposing to take action after it warned Carillion and certain directors that they had acted “recklessly” and made misleading statements about the value of the business.

The Financial Conduct Authority (FCA) said on Friday (13 November) that it had given warning notices to Carillion (in liquidation since 15 January 2018) and to certain previous executive directors.

In relation to Carillion, the FCA is proposing a public censure rather than a financial penalty.

The FCA said that during the period from 1 July 2016 to 10 July 2017, Carillion breached rules on market manipulation by giving “false or misleading” signals as to the value of its shares, as well as “failing to take reasonable care to ensure that its announcements were not misleading”.

Carillion was also accused of “failing to take reasonable steps to establish and maintain adequate procedures, systems and controls” to enable it to comply with listing rules, and of “failing to act with integrity towards its holders and potential holders of its premium-listed shares”.

The FCA said that relevant directors were “knowingly concerned” in the breaches.

It said: “Carillion’s announcement on 7 December 2016, 1 March 2017 and 3 May 2017 were misleading and did not accurately or fully disclose the true financial performance of Carillion. They made misleadingly positive statements about Carillion’s financial performance of that business and the increasing financial risks associated with it.

“Carillion’s systems, procedures and controls were not sufficiently robust to ensure that contract accounting judgements made in its UK construction business were appropriately made, recorded and reported internally to the board and the audit committee.

“At material times, the relevant executive directors were each aware of the deteriorating expected financial performance within the UK construction business and the increasing financial risks associated with it. They failed to ensure that those Carillion announcements for which they were responsible accurately and fully reflected these matters. Despite their awareness of these deteriorations and increasing risks, they also failed to make the board and the audit committee aware of them, resulting in a lack of proper oversight.”

The FCA also stressed that the warning notices do not represent a final decision, and that the firm and individuals have the right to make representations to the Regulatory Decisions Committee (RDC).


Another fine example of ‘Closing the stable door after the horse has bolted’

Dessie Dorrian, 16 November 2020

All future judgement needs to take into consideration all the moneys/livelihoods of the smaller subcontractors that were lost & destroyed as a direct result. Prosecutors need to ensure those responsible cannot just happily retire & swan about in their beach homes?

Tim Fenn, 17 November 2020

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